Government support in a post-COVID world
We explore the government’s industry recovery plans in nations where mining has a major impact on the economy.
Many mining sites around the world have been hotspots for outbreaks of COVID-19, and in some areas such as Poland’s mining-reliant Silesia region, efforts to reduce the spread of the virus have proved to be ineffective.
Almost every mining site worldwide were forced to reduce and completely halt their operations as part of efforts to avoid the virus from spreading, but this has had a considerable impact on both the industry and economics of many countries around the world.
In many countries, mining operations continue to get back to normal capacity, although the effects the pandemic is having on the industry are set to last many, many months into the future, and well into 2021.
As the industry is unable to recover on its own, governments across the world are doing their part to invest in the industry in order to keep jobs and prevent mining companies from going under.
It was recently announced by the Government of Western Australia that AU$8.2mn will be allocated to resource exploration across the state as part of its own COVID-19 recovery plan.
The funding will include the purchase of the nation’s first CAMECA-1300 ion microprobe. This is in addition to funding for the Exploration Incentive Scheme (EIS) which will increase the total funding for the scheme to AU$15mn.
South Africa has mining operations scattered right across the nation, and although Africa wasn’t as largely hit with coronavirus as other areas mentioned, South Africa did and continues to have a large number of cases across the country.
The Minerals Council South Africa is supporting new strategy proposals from Business for South Africa (B4SA) in order to assist in the economic recovery from the virus. Several key areas need to be urgently addressed as part of the recovery process.
Minerals Council CEO Roger Baxter said: “The South African economy was in a crisis even before COVID-19 struck with declining international competitiveness, a collapse in business and investor confidence, falling investment, low levels of economic growth, rising unemployment and accelerating poverty and social upheaval.
COVID-19 has pushed South Africa further into the precipice, with at least 1 million jobs already lost, an estimated 8% decline in GDP likely in 2020, a fiscal deficit that has bourgeoned to nearly 15% of GDP and public debt that is likely to exceed 100% of GDP in a couple of years. South Africa is at a critical fork in the road and it can choose to follow the low road or the high road.”
Over in Canada, the nation’s government has a number of COVID-19 support programmes, some of which cover various areas of the mining industry. The Regional Relief and Recovery Fund is one of those, which pledges to provide almost CA$1bn to support financial pressures which businesses endured to allow operations to continue whilst being able to pay employees.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”